Liberty Mutual Insurance Reports Second Quarter 2018 Results

Liberty Mutual Holding Company Inc. and its subsidiaries (collectively "LMHC" or the "Company") reported net income attributable to LMHC of $981 million and $1.629 billion for the three and six months ended June 30, 2018,increases of $855 million and $1.152 billion over the same periods in 2017. Including $1 million and zero of net loss attributable to non-controlling interest, consolidated net income for the three and six months ended June 30, 2018 was $980 million and $1.629 billion, respectively.

"Building on the progress made in the first quarter, net income attributable to Liberty Mutual Holding Company increased to $981 million for the second quarter of 2018," said David H. Long, Liberty Mutual Chairman and Chief

Executive Officer.

"The combined ratio in the quarter was 97.9% as global catastrophes returned to historical levels and core underwriting results improved across many business segments. Favorable partnership, LLC and other equity method investment valuations and an after-tax gain of $464 million related to the sale of Liberty Life Assurance of Boston added to profitability. Growth was robust at 7%."

Second Quarter Highlights

* Net written premium ("NWP") for the three months ended June 30, 2018 was $10.071 billion, an increase of $685 million or 7.3% over the same period in 2017.

* Pre-tax operating income("PTOI") before partnerships, limited liability companies ("LLC") and other equity method income for the three months ended June 30, 2018was $471million, an increase of $452 million over the same period in 2017.

* Partnerships, LLC and other equity method income for the three months ended

June 30, 2018 was $291 million, an increase of $185 million or 174.5% over the same period in 2017.

* Net realized (losses) gains for the three months ended June 30, 2018 were ($59) million versus $18 million for the same period in 2017.

* Ironshore Inc. ("Ironshore") acquisition and integration costs for the three months ended June 30, 2018 were $10 million, a decrease of $16 million or 61.5% from the same period in 2017.

* Restructuring costs for the three months ended June 30, 2018 were $28 million versus zero for the same period in 2017.

* Loss on extinguishment of debt for the three months ended June 30, 2018 was $3 million versus zero for the same period in 2017.

* Discontinued operations, net of tax, for the three months ended June 30, 2018 were $471 million, an increase of $419 million over the same period in 2017.

* Consolidated net income for the three months ended June 30, 2018 was $980 million, an increase of $853 million over the same period in 2017.

* Net loss attributable to non-controlling interest for the three months ended June 30, 2018 was $1 million versus net income attributable to non-controlling interest of $1 million for the same period in 2017.

* Net income attributable to LMHC for the three months ended June 30, 2018 was $981 million, an increase of $855 million over the same period in 2017.

* Cash flow provided by continuing operations for the three months ended June 30, 2018 was $1.120 billion, an increase of $136 million or 13.8% over the same period in 2017.

* The consolidated combined ratio before catastrophes, net incurred losses attributable to prior years and current accident year re-estimation for the three months ended June 30, 2018 was 92.3%, a decrease of 1.3 points from

the same period in 2017. Including the impact of catastrophes, net incurred losses attributable to prior years and current accident year re-estimation, the total combined ratio for the three months ended June 30, 2018 was 97.9%, a decrease of 4.9 points from the same period in 2017.

Year-to-date Highlights

* NWP for the six months ended June 30, 2018 was $19.505 billion, an increase of $1.431 billion or 7.9% over the same period in 2017.

* PTOI before partnerships, LLC and other equity method income for the six months ended June 30, 2018 was $864 million, an increase of $744 million over the same period in 2017.

* Partnerships, LLC and other equity method income for the six months ended

June 30, 2018 was $507 million, an increase of $241 million or 90.6% over the same period in 2017.

* Net realized gains for the six months ended June 30, 2018 were $96 million, a decrease of $73 million or 43.2% from the same period in 2017.

* Ironshore acquisition and integration costs for the six months ended June 30, 2018 were $24 million, a decrease of $12 million or 33.3% from the same period in 2017.

* Restructuring costs for the six months ended June 30, 2018 were $31 million versus zero for the same period in 2017.

* Loss on extinguishment of debt for the six months ended June 30, 2018 was $3 million, an increase of $2 million over the same period in 2017.

* Discontinued operations, net of tax, for the six months ended June 30, 2018 were $530 million, an increase of $421 million over the same period in 2017.

* Consolidated net income for the six months ended June 30, 2018 was $1.629 billion, an increase of $1.151 billion over the same period in 2017.

* Net income attributable to non-controlling interest for the six months ended June 30, 2018 was zero versus $1 million for the same period in 2017.

* Net income attributable to LMHC for the six months ended June 30, 2018 was $1.629 billion, an increase of $1.152 billion over the same period in 2017.

* Cash flow provided by continuing operations for the six months ended June 30, 2018 was $1.156 billion, an increase of $425 million or 58.1% over the same period in 2017.

* The consolidated combined ratio before catastrophes and net incurred losses attributable to prior years for the six months ended June 30, 2018 was 93.7%, a decrease of 0.4points from the same period in 2017. Including the impact of catastrophes and net incurred losses attributable to prior years, the total combined ratio for the six months ended June 30, 2018 was 98.5%, a decrease of 3.9points from the same period in 2017.

Financial Condition as of June 30, 2018

* Total debt was $8.271 billion as of June 30, 2018, a decrease of $54 million or 0.6% from December 31, 2017.

* Total equity was $20.880 billion as of June 30, 2018, an increase of $192 million or 0.9% over December 31, 2017.

Subsequent Events

Management has assessed material subsequent events through August 9, 2018, the date the financial statements were available to be issued.